Adviser > Technical Central > Pre simplification > Occupational > Civil Service Pensions - Classic Scheme
Civil Service Pensions - Classic Scheme
The content of this page is based on our understanding of how pensions worked before A-Day, the 6 April 2006, and is provided for reference only.
Historically civil servants had access to the Principal Civil Service Pension Scheme (PCSPS). From 1 October 2002 four pension schemes were made available: namely Classic, Classic Plus, Premium and Partnership. The four schemes offer different types of benefits.
Classic - This scheme is final salary and is closed to new entrants. Civil servants who were members of the PCSPS prior to 1 October 2002 who decided not to join any of the other civil service pension schemes are automatically members of this scheme.
Civil Service Pensions - Classic Plus Scheme - A final salary scheme closed to new entrants. Members are employees who were members of the PCSPS on 30 September 2002 who decided to join this scheme. It is a combination of Classic benefits for service up to 30 September 2002 and the equivalent of Premium benefits from 1 October 2002.
Civil Service Pensions - Premium Scheme - Final salary scheme open to employees who were members of the PCSPS on 30 September 2002 and chose to join this scheme with effect from 1 October 2002. This scheme is open to new entrants.
Civil Service Pensions - Partnership Pension Account. - A stakeholder pension scheme open to all employees who are not members of one of the other schemes.
This overview outlines the features of the Classic scheme. Overviews of the other schemes are available by clicking on their names above.
All the Civil Service Schemes are being reviewed by the Government. They plan to move from a final-salary scheme to a whole career scheme and also want to alter the pension age from 60 to 65. The consultation ended on 4 March 2005, however no decision has yet been reached.
Administrator & website address
To find out who the administrator is, look up the Helpline on the Civil Service Pensions Website
Look up the organisation the member works for e.g. Home Office. An alphabetical list is provided on the Helpline page of the website
Contracted-out
Yes
Contribution basis
AVC scheme available - Yes
Stakeholder scheme available - Yes
Member contribution - 1.5% p.a. of pensionable earnings. If the member has a disabled child then they can choose to pay a contribution of 2% p.a. of pay (or more) to provide a child’s pension after death
Employer contribution - This is called 'accruing Superannuation liability charge'. This is currently based on salary bands, ranges between 12% p.a. and 18.5% p.a. Rates are reviewed every 3 years
Added years permitted? - Yes, via Classic scheme or AVCs
Salary definition
Pensionable earnings - Basic pay and some allowances
Final pensionable earnings - Whichever period of 12 months in the last 3 years of actual service as a member of Classic gives the highest figure
Qualifying and reckonable service - Generally from date of joining to exit date in years and days
Normal retirement benefits
Normal retirement age - age 60
Pension - 1/80th of final pensionable earnings for each year of reckonable service
Lump sum - 3 x annual pension
Early retirement on the grounds of ill-health
Members receive an immediate pension and lump sum which may be enhanced depending on the length of service:
- Less than 5 years service – no enhancement
- Between 5 and 10 years service – service doubled (subject to Her Majesty's Revenue & Customs (HMRC) limits)
- 10 or more years service – the higher of:
- Service increased to 20 years, (subject to HMRC limits) and,
- Service increased by 6 2/3 years, or, if less, the amount the member would have built up by
pension age
No actuarial reduction is applied to the pension
Early retirement
Members can take early retirement from age 50 - an early retirement factor is applied for each year the pension is taken early
Different types of early retirement/redundancy benefits are also provided under the Civil Service Compensation Scheme. They are:
- Compulsory early severance
- Flexible early severance
- Approved early retirement
- Compulsory early retirement
- Early retirement with actuarially reduced benefits
- Flexible early retirement
Late retirement
Benefit accrual can continue until the member has 45 years reckonable service
Commutation factors
12:1
Pension increases
In line with RPI - paid to pensioners age 55 or over
Death before retirement benefits
Lump sum - 2 years pensionable earnings (lump sum may be increased up to 4 times salary if AVCs are paid by the member)
Short-term increase - A short-term increase is payable for the first 91 days after death. This may be extended if there are dependant children. This benefit is equal to pensionable earnings
Dependant's benefits
Dependants' pensions (death after leaving service)
- A spouse’s pension of 50% of member’s pension plus
- the preserved lump sum
- childrens' pensions (if payable), certain restrictions apply
Widow's/widower's/partner's benefits - If the spouse gets married again or cohabits, the pension will either stop or be reduced
Death after retirement benefits
Lump sum - If member dies within 5 years of starting to receive their pension, a lump sum amounting to the difference between 5 times the annual pension less any pension and lump sum payments received
Short-term increase - A short-term increase is payable for the first 91 days after death. This may be extended if there are dependant children. This benefit is equal to the member's annual pension
Dependant’s benefits - After 91 days a spouse’s pension of 50% of member’s pension is payable
Childrens' pensions are available, however certain restrictions apply
Early leaver options
Transfer value - A transfer value is available, even if the member has less than 2 years service
Preserved pension - If the member has 2 or more years service then they can elect to make their benefit paid up. This pension will become payable from age 60
Refund of contributions - If the member has less than 2 years service, then a refund of member’s contributions can be paid
Treatment of pension rights on divorce
Earmarking - The court can order the scheme to pay all or part of the pension and lump sum. The scheme will only make payments to the former spouse when a court order has specifically instructed them to do so. If the former spouse remarries, he or she will not receive payments in respect of the pension after date of remarriage, however this normally does not affect the lump sum which has been earmarked
Pension sharing on divorce - The accrued pension rights are reduced by a percentage confirmed by the court. The former spouse is given rights in the scheme equal in value to the amount of reduction – known as the pension credit rights. There is no option to transfer the pension credit rights out of the scheme
Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.
Updated 5 August 2005
For professional advisers only
